About the Course
Introduction
This CLE/CPE course will provide estate planning counsel and fiduciaries with a practical guide to meeting the challenges of administering a generation-skipping transfer (GST) trust. The panel will discuss critical issues related to calculating the GST tax inclusion ratio and those involving both GST-exempt and non-exempt trusts, where tax consequences may arise from disproportionate allocation provisions. The webinar will also address implications and potential solutions to mixed inclusion ratio trusts to rehabilitate flawed planning.
Description
Critical to successful multi-generational gift tax planning and compliance is a solid foundation in the complex GST tax regime of Section 2632 and following statutes. Beyond identifying skip-person transferees and gifts that will trigger GST tax, fiduciaries must have a detailed understanding of the rules to calculate the tax cost of GSTs.
Section 2642 provides the framework for determining the taxable portion of any GST. The inclusion ratio works with the "applicable fraction" to determine the tax rate of a GST. A trust with an inclusion ratio of 0 is exempt from GST tax, while a trust with a ratio of 1 is fully taxable; either of these ratios is considered optimally efficient, depending on drafting and planning goals. However, post-death events often create challenges to existing allocation provisions.
Trustees or other parties such as trust protectors or directors with authority to effect distributions may have the power to make non-pro rata or non-per stirpes allocations of GST exemption amounts, even in cases where the decedent has distributed property on a pro rata basis.
Additionally, the fiduciary may be able to sever a GST trust into separate instruments. Depending on the asset makeup, a fiduciary may also tailor investment decisions to minimize the GST tax impact of transfers, such as having the GST-exempt trust invest in growth assets that produce minimal trust accounting income to distribute.
Listen as our experienced panel provides a practical guide to the tax-efficient administration of GST trusts.
Presented By
Ms. Dromsky-Reed concentrates her practice in estate planning and estate administration. She provides individuals and families with advice regarding spousal, intergenerational, business succession, charitable planning and preparation of prenuptial agreements. Ms. Dromsky-Reed is a Fellow of the American College of Trust and Estate counsel and is a frequent author and lecturer on estate planning and administration.
Ms. Matak is a member of Brach Eichler LLC in the firm’s Trusts and Estates practice group. She brings a unique perspective as an income tax specialist gained from years working in public accounting, helping clients save current income taxes with strategies that also achieve business succession, asset protection, life insurance structuring and estate planning goals. Ms. Matak serves on the editorial board of Trusts & Estates magazine for which she co-authors the print journal’s bi-monthly column Practical Practice Solutions, and regularly contributes thought leadership to Tax Management Estates, Gifts and Trusts (BNA) Journal; Leimberg Information Services, Inc. (LISI); and Estate Planning Review The CCH Journal, among others, on a variety of topics including wealth transfer strategies, income taxation of trusts and estates, and business succession planning. She co-authored a book on the 2017 tax reforms entitled Estate Planning: Estate, Tax and Other Planning after the Tax Cuts and Jobs Act of 2017.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Tuesday, September 8, 2026
- schedule
1:00 PM ET/10:00 AM PT
I. IRC 2642 structure
A. Inclusion ratio defined
B. Applicable fraction defined
C. Treatment of inclusion ratios in the severance of GST-impacted trust into two or more trusts
II. Post-mortem events and transfers requiring recomputation of inclusion ratio and the appropriate fraction
III. Trust severance rules and opportunities
IV. Roles of various fiduciary and administrative persons
The panel will review these and other relevant topics:
- How to spot trusts with an inclusion ratio greater than 0
- Proactively identifying valuation opportunities when calculating inclusion ratios
- The interrelation between inclusion ratio and the applicable fraction under Section 2642 and its regulations
- Special rules for CLATs and other types of trusts in the calculation of inclusion ratio and the imposition of GST tax
- Regulatory guidance for calculating numerator and denominator of applicable fractions
Related Courses
GST Trust Administration Challenges for Fiduciaries
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Intersection of State Lines and Estate Lines: Estate Planning Challenges When Relocating Across State Lines
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